Mortgage arrears remain stable despite the recent turbulent economic developments, lenders have said in a recent parliamentary committee meeting.
In the Treasury committee meeting on the subject of mortgages, Nationwide home commercial director, Henry Jordan, said: “We’ve seen a one basis point increase in arrears in the past 12 months.”
This was out of step with other observations made by Jordan as he said: “Customers are generally taking action, we’ve seen an increase in overpayments, an increase in term extension but no material increase in arrears.”
This observation was echoed by the other lenders on the panel including Lloyds Banking Group homes director, Andrew Asaam, who said: “Arrears remain very low in a historical context”.
Santander UK mortgage director, Bradley Fordham, added that, while there has been a small uptick in arrears, the rates were still 20 per cent below pre-pandemic levels and 70 per cent below the levels in 2009.
Skipton Building Society interim CEO, Charlotte Harrison, said: “In terms of the trend of percentage of customers that are in arrears that remains flat year-on-year.”
The committee additionally discussed the mortgage charter, with lenders saying that, while much of what the charter offers is already available, it is still benefical to customers.
This point was made by Assam who stated that, as so many different lenders have different approaches to mortgage lending, the mortgage charter, which currently covers 85 per cent of the financial market, can provide some certainty for customers on what is available.
Volatility in mortgage products was also examined in the committee meeting, with increasing base rates being blamed for the recent inconsistency in products.
Fordham explained: “In terms of availability of products, it has been a very volatile period.
“Base rates have been increasing, swap rates have been increasing and therefore there have been price increases by lenders.”
However, Fordham explained: “We are super conscious of that and we give brokers notice in advance that our products are changing.”
Looking to the future, Harrison said: “What I expect to see over the next six months is we will see more customers with financial stress but I expect that will be relative to the market and there will be options available to those customers.”
She added: “In this higher interest rate environment, I expect we will see higher financial stress than we have to date.”
tom.dunstan@ft.com
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